Improve Access to Capital

Why Is This Important?

The availability of capital for businesses to start, expand and pursue valuable projects is critical for creating more high wage jobs, both in the short and long-run.

Business financing is critical for entrepreneurs looking to launch new ventures, for existing companies who need to make payroll or purchase equipment and land to expand, and for developers pursuing energy and infrastructure projects.

In many ways, the availability of both debt and equity capital in Oregon is dependent upon economic issues at the national and global level. Yet proximity to equity capital improves the likelyhood that Oregon startup ventures will get funded, and efforts by the local, state and federal government to address capital gaps should be coordinated and focused on leveraging additional private investment.

Goal of This Initiative

Improve capital availability for a variety of Oregon businesses and strengthen Oregon’s climate for, and culture of, investing in businesses.

Recent Progress

In February 2012, the Legislature passed HB 4040, the Oregon Investment Act, which established the Oregon Growth Board. This was an important first step in creating a nimble, flexible, and coordinated investment vehicle for business growth in Oregon.

The Act has three overarching goals:

Increase funds to invest in Oregon opportunities – and create jobs — by targeting and leveraging public resources such as the Lottery to attract substantial investments from the private sector.

Make Oregon’s economic development efforts smarter, more nimble and more streamlined, by vesting decisions and priorities about how and where to invest funds in a panel of experts with private sector expertise, rather than disparate agencies.

Invest public money wisely. Facilitate better reporting of the results Oregon is getting for its economic development investments, to help ensure the public is getting the best value.

Oregon Business Plan Strategy

The Oregon Investment Act created and directed a new Board to survey the economic development landscape and propose a targeted, yet flexible approach to public investments. The Oregon Growth Board includes a talented mix of private-sector leaders with business finance and investment backgrounds.

The Board will identify the capital needs and gaps that exist and invest in an effective set of State-sponsored and other capital resources for businesses in Oregon. A key goal is that these activities be built into a coordinated, unified strategy and structured as part of an investment portfolio that leverages substantial private dollars. Through increased coordination and consolidation of functions, the Board believes the state can save costs and duplication.

The Board will build off the initial capital scan and seek advice from business and industry throughout the state, as well as pioneering entities like the Oregon Innovation Council (Oregon InC). Based on that information, investment allocations and targets will be established and also be regularly reevaluated. Recognizing that market conditions change, the Board will maintain the authority and flexibility to adjust those allocations as necessary.

By adopting a broader, more flexible approach to investment, Oregon can better meet the demands of businesses and entrepreneurs as needs and opportunities arise.

Actions for 2013

Based on the Legislature’s support, passage and direction provided by the Investment Act, we propose that the Board, the legislature and the Governor take the following action in 2013:

1. Based on the capital gaps that have been identified and the need to improve the state’s competitive standing, remove the sunset date associated with the Oregon Investment Act.

2. Adopt an umbrella strategy of targeting investments across the capital continuum, to include early stage, growth and debt capital and mentoring assistance to support the entrepreneurial ecosystem. Two initial priority areas are:

• The need to deploy and increase capital availability that further early stage investments.
• Target investments that grow traded sector companies in Oregon.

3. The legislature should transfer oversight of the Oregon Growth Account and its current, recurring allocation from the State Treasury to the Board. The existing Oregon Growth Account Board would be abolished. The Growth Account receives a portion of Lottery proceeds to invest in early-stage companies, alongside private sector partners, with the returns used to benefit the Oregon Education Stability Fund.

4. The Growth Board should broaden the scope of the Growth Account to allow for additional investment beyond emerging growth businesses, so that economic factors can be considered as a reason or investments.

5. The Board should develop standard metrics to measure and report how well the investments are faring, based on the investment stage, focusing on:

• Leverage
• Returns
• Job creation
• Increase in businesses assisted

6. The legislature should provide the Board with allocation authority, with the Business Oregon Commission, to coordinate the deployment of economic development resources, but not as direct investments into individual companies – the Board will not directly invest in any project or company.

7. The legislature should give clearance to build the Fund, to be directed by the Board. Based on the experience of other states and experts in the field, the Board has received considerable information regarding potential funding and will provide a recommendation to the Legislature as part of its report.